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Session_2_Lync Partner Economic Opportunity Forrester Study - Copy
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Transcript of Session_2_Lync Partner Economic Opportunity Forrester Study - Copy
© 2011 Forrester Research, Inc. Reproduction Prohibited1 © 2009 Forrester Research, Inc. Reproduction Prohibited
The Lync Business Opportunity For Partners
Michael SpeyerSenior ConsultantForrester ConsultingMonth Day, 2011
© 2011 Forrester Research, Inc. Reproduction Prohibited2
Agenda
Study purpose, methodology and summary findings
1000 seat Voice deployment: deal analysis
Revenue, expense and income analysis
© 2011 Forrester Research, Inc. Reproduction Prohibited3
What is a Partner Total Economic Impact study?
Business Value• Revenues• Margins
Business risk• More accuracy• Higher success
Total Economic Impact™
(TEI)
RISK
Revenues
Expenses
Flexibility“Options” created
• Base for future• Valued financially
Expenses• Startup• Ongoing
© 2011 Forrester Research, Inc. Reproduction Prohibited4
Due diligence: Review existing relevant Forrester research, consult with Forrester analysts. Interviews with Microsoft marketing, sales and partner management leads.
Partner interviews: Fourteen in-depth interviews with Microsoft partners
– 5 Global Sis– 9 National and Regional Sis– All interviewed partners had performed many OCS deployments, ranging from 200
– 10,000 seats
TEI methodology and approach
Construct financial model using TEI
framework
Write case study
Perform due diligence
Conduct partner
interviews
Formulate typical deal
© 2011 Forrester Research, Inc. Reproduction Prohibited5
Summary of findings
Economic impact of a 1000 seat full Lync deployment including Voice
One-time assessment, design and deployment revenues: $175,000 – Average gross margins + incentives: $84,253 (48%)
– 3-year ROI: 177%, breakeven period of 16 months
Support revenues: $84,000– Assumes managed services @ $7/seat/month
– Potential for annual recurring revenues
Observations about the more successful practices– Lync is usually part of a larger portfolio of Microsoft practice areas
– Services are packaged and offered as standard offerings
– Lync is used to ‘pull through’ other revenue opportunities e.g. hardware, software, managed services, telecom services.
– Sales and marketing efforts are focused (not random)
© 2011 Forrester Research, Inc. Reproduction Prohibited6
Evolution of Lync deals Lync (OCS) deal progression has typically been:
– IM/presence Conferencing Voice integration PBX replacement
The deal mix is evolving:– Yesterday: 90% IM/P, 10% voice
– Today: 75% IM/P, 25% voice
– Tomorrow (next 12 months): 50% IM/P, 50% voice
VoIP (IP phone/softphone, IP/PBX)
IP audio conferencing
0% 25% 50% 75% 100%
6%
13%
10%
22%
22%
25%
13%
12%
48%
24%
1%
4%
Not interested Interested but no plans Implemented, not expandingPlanning to implement Expanding/upgrading implementation Decreasing/removingDon’t know
Base: 353 voice purchasing decision makers in North American enterprises
“What are your firm’s plans to adopt the following landline voice technologies/services? “
Source: Forrester Research, “Networks And Telecommunications Survey, Q1 2010”
© 2011 Forrester Research, Inc. Reproduction Prohibited7
Agenda
Study purpose, methodology and summary findings
1000 seat Voice deployment: deal analysis
Revenue, expense and income analysis
© 2011 Forrester Research, Inc. Reproduction Prohibited8
Lync business opportunity framework
Workflow and Network Assessments
Pilots
Design and deployment
Support
Hardware resell and incentives
Staffing and training
Sales and marketing
Support systemsDemo lab
Custom app dev
Revenues and margins Expenses
© 2011 Forrester Research, Inc. Reproduction Prohibited9
Lync business opportunity – Assessment services
Assessment services include business productivity, workflow, business value (ROI).o Difficult to monetize, treat as pre-
sales activities
Network assessment services are critical to successful voice pilots and deployments.o $5,000 - $25,000 revenues
o 30% - 40% gross margins
o This is a ‘must-have’ service offering
Workflow and Network Assessments
Pilots
Design and deployment
Support
Hardware resell and incentives
© 2011 Forrester Research, Inc. Reproduction Prohibited10
Lync business opportunity - Pilots
“Pilots drive business !!!”o Successful pilots of the full stack
demonstrate Lync’s capabilities.
o Establish a toe-hold for future Lync voice expansion (the PBX / gateway integration is already done)
o Typical deployment scenarios are branch office, mobile worker or limited (250 seat) in-office.
o Breakeven to 10% gross margins
Workflow and Network Assessments
Pilots (voice)
Design and deployment
Support
Hardware resell and incentives
© 2011 Forrester Research, Inc. Reproduction Prohibited11
Lync business opportunity – Design and deploy
Bread and butter serviceo Design, deploy, acceptance testing
o Typically 50% - 70% of project revenue
o Revenues scale with project scope and complexity
o 35% - 45% gross margins
o Knowledge transfer can be monetizedo Training
o Documentation
Workflow and Network Assessments
Pilots (voice)
Design and deployment
Support
Hardware resell and incentives
© 2011 Forrester Research, Inc. Reproduction Prohibited12
Lync business opportunity – Support services
Support offers significant revenues opportunitieso Voice buyers expect support
o Potential for long term, recurring revenue streams
o 30% - 45% gross margins
Many flavors of supporto Short term, post deployment ($ for
hours)
o Maintenance (multiple blocks of hours)
o Remote managed services ($/seat/month)
Workflow and Network Assessments
Pilots (voice)
Design and deployment
Support
Hardware resell and incentives
© 2011 Forrester Research, Inc. Reproduction Prohibited13
Lync business opportunity – Hardware and software
Hardwareo Voice deployments need headsets,
desktop / conference phone, gateways etc.
o 2% - 10% gross margins
o Establish relationships with hardware vendors / distributors
Software incentiveso Microsoft solution incentive on net
new license sales
o 10% - 20% incentives
Workflow and Network Assessments
Pilots (voice)
Design and deployment
Support
Hardware resell and incentives
© 2011 Forrester Research, Inc. Reproduction Prohibited14 © 2011 Forrester Research, Inc. Reproduction Prohibited
, Revenues Gross Margins GM %
Assessment and pilots
Workflow / business value assessment services $3,000 $300 10%
Network assessment and readiness $16,000 $5,600 35%
Voice Proof of Concept $20,000 $2,000 10%
DeploymentDesign and deployment services $100,000 $38,000 38%
Training, knowledge transfer $36,000 $14,400 40%
Hardware and incentives
Hardware resell ~($256,950) $10,473 4%
Software incentive ~($264,900) $13,480 5%
Total one-time services, resell and incentives $175,000 $84,253 48%
Support (1 year’s revenue)
Option 1: Blocks of hours $30,000 $9,000 30%
OR
Option 2: Managed services @ $7/seat/month $84,000 $31,500 37.5%
Other Application development (Communications Enabled Business Process) $50,000 $20,000 40%
Lync revenue analysis – 1000 seats, all workloads (IM/P, conferencing, PBX replacement)
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Risk factors and revenue variance
The market for Lync Voice is relatively new but buyer interest is increasing– Momentum is in your favor
Voice deals can take 3 – 6 months to close– IM/P and conferencing deals close faster (4 – 6 weeks)
– Must be able to sell to multiple decision makers (Voice, data/network, business)
– Potential for lower utilization rates for services professionals during ramp up
Overall project revenues may vary considerably – Project scope, complexity, type of Lync workloads
Revenues from network assessment s are highly variable– Driven by the state and complexity of the underlying network
– Network readiness offers additional revenue opportunities but requires highly specialized skill sets.
Must have a Voice support strategy– Voice has to be bullet-proof
© 2011 Forrester Research, Inc. Reproduction Prohibited16
Lync business opportunity – Staffing and training
Deployment professionalso Voice-specific expertise is essential
Sales, solutions architects
Support professionals
Training expense of $30,000+ at startup, excluding lost billable hours
Additional ongoing hiring and training expense commensurate with business growth
Staffing and training
Sales and marketing
Support systemsDemo lab
Custom app dev
© 2011 Forrester Research, Inc. Reproduction Prohibited17
Lync business opportunity – Sales and marketing
Marketingo Collateral, events etc.
o $20,000+ expense annually
o Packaged deliverable developmento Helps formalize services offerings
o Informs customers about what’s needed for different deployments
Staffing and training
Sales and marketing
Support systemsDemo lab
Custom app dev
© 2011 Forrester Research, Inc. Reproduction Prohibited18
Lync business opportunity – Optional investments
NOC and support staff are necessary for remote managed services offering– Capital investment+ recurring
expense
Build a demo lab to showcase your capabilities and Lync– Capital investment+ recurring
expense
Use custom app dev to differentiate– Service verticals
– Staffing expense
– Development risk
Staffing and training
Sales and marketing
Support systemsDemo lab
Custom app dev
© 2011 Forrester Research, Inc. Reproduction Prohibited19 © 2011 Forrester Research, Inc. Reproduction Prohibited
Comment
Assumptions
Number of new hires 2 1x delivery professionals, 1x sales
Recruiting expense 25% of salary
Per person training cost $5000
Startup expenses
Recruiting expense and non-billable hours during ramp up $135,500 25% of salary recruiting expense
Training expense $15,000 2x new hires, 1x existing hire
Marketing $40,000
Total startup expense $192,500
Lync startup costs
© 2011 Forrester Research, Inc. Reproduction Prohibited20
Agenda
Study purpose, methodology and summary findings
1000 seat Voice deployment: deal analysis
Revenue, expense and income analysis
© 2011 Forrester Research, Inc. Reproduction Prohibited21
Lync can generate 177% ROI over 3 years and breakeven in 16 months
Startup Year 1 Year 2 Year 3
Number of deals 3 5 9
Total incremental revenues 525,000 1,177,000 2,095,000
Total gross margin 252,758 535,763 955,773
Total costs (192,500) (157,500) (165,000) (40,000)
Contribution to business (192,500) 95,258 370,763 915,773
3 Year ROI 177%
Breakeven 16 months
© 2011 Forrester Research, Inc. Reproduction Prohibited22
Interview insights: Best practices for developing a successful Lync practice
Network assessments and readiness are critical for successful Voice deployments
Voice pilots drive business– Limit their duration to push the customer forward
Training is critical– Must know Windows Server, Exchange, Lync
You must have support offers for Voice customers– Need an experienced Voice resource to solve the tricky challenges
– Consider establishing a managed services (MSP) practice. It offers recurring revenue streams
Be a one-stop-shop, to whatever extent possible– Create partnerships with hardware vendors
© 2011 Forrester Research, Inc. Reproduction Prohibited23
Michael Speyer+1 617.613.6349
www.forrester.com
Thank you
© 2011 Forrester Research, Inc. Reproduction Prohibited24
Appendix 1: 3 Year Lync P&L, all numbers Assumptions Startup Year 1 Year 2 Year 3
Number of deals 3 5 9
Revenues Professional services 175,000 525,000 875,000 1,575,000
Support (Managed services ) 84,000 252,000 420,000
Application development 50,000 50,000 100,000
Total incremental revenues 525,000 1,177,000 2,095,000
Gross Margins Professional services 60,300 180,900 301,500 542,700
Support (Managed services ) 30,000 - 94,500 157,500
Application development 20,000 - 20,000 40,000
Software incentive 40,440 67,400 121,320
Hardware resell 31,418 52,363 94,253
Total gross margin 252,758 535,763 955,773
Costs New hires 2 1 4 -
Recruiting, 6 month ramp up (137,500) (112,500) (110,000) -
Training 5,000 (15,000) (5,000) (15,000) -
Sales and Marketing (40,000) (40,000) (40,000) (40,000)
Total costs (192,500) (157,500) (165,000) (40,000)
Contribution to business (192,500) 95,258 370,763 915,773
3 Year ROI 177%
Breakeven 16 months